Tuesday, March 17, 2009

I think I'll start a new feature of this blog titled: "It' Legal." I'll be highlighting things that are legal in this country but shouldn't be. Fist off, the credit card companies:

Did you know that a credit card company has the legal right to lower the credit limit on your card to below your outstanding balance, thus triggering over-limit penalties?

Paul Pensabene of Saratoga Springs, N.Y., received a statement from HSBC on Dec. 8 that said he had a $359.99 balance and remaining available credit of $8,640. But when he went online to pay the bill several days later, his online account showed that same balance put him over his newly-reduced credit line of $300. And that didn't include the $35 over-limit fee. Pensabene grappled with customer service until they agreed to remove the fee, and then paid the balance in full. "All I could think was, 'Good lord, what if this is happening to someone that couldn't pay their balance off in one shot?'" he says. "They'd end up in default with these fees piling up."

HSBC cut this guy's credit line from over $8000.00 to just $300.00 and in so doing, triggered an over-limit penalty. The credit card companies, of course, are notorious for this sort of thing. From extortionate, usurious interest rates, to summarily raising rates on customers with perfect payment records, Credit Card companies enjoy seemingly unlimited discretion to wreak havoc on their customers' lives and ruin their credit ratings.

The good new is this sort of thing will be illegal in 2010. Still, one wonders why it was ever legal in the first place.